DAOstack use cases for scalable DAOs


Q.) In our community Telegram it was asked by @dylanschwartz "Can someone from DAOstack please provide a use case of a large scale organization that could benefit from adoption of the protocol?"

A.) Answered by @joshmzemel [DAOstack Communications]:

In the broadest sense, the use case for DAOstack is any time there is a need to coordinate a large group of people to make decisions collectively. So, to imagine various specific cases, we can imagine a few different types of decisions a group might need to make.

  1. Collaboration to Produce an Outcome (“Work”)

In cases where the goal is to develop or deliver products and services – roughly speaking, a decentralized ‘company’ – the decisions often concern how to value individual contributions, and how to budget for work and other purchases. What projects should be funded? How much should so-and-so be paid for that article, or that software upgrade? What will be the process for verifying and evaluating work? Should the organization invest in this or that office space, or legal support, or PR firm? Examples include:

A film project of 1,000 artists
An open-source software project of 10,000 developers
A climate initiative of 50,000 scientists
A collaborative news network of 100,000 journalists

  1. Asset Management

These types of collectives make decisions primarily about the management of assets and the allocation of funds. Should we invest in this project, or property? Should we pay out this or that claim? Should we sell this or that asset? Examples include decentralized versions of:

Venture funds
Insurance networks
Charitable funds
Pension funds
Real estate investment collectives

  1. Curation

Curation networks leverage the wisdom of the crowd to rank the subjective quality of objects. What content should be featured in the feed or the newsletter? How trustworthy is this company? How good is the food at this place? Examples include decentralized versions of:

Restaurant or hotel guides, similar to Yelp or TripAdvisor
Article or video feeds, akin social news feeds or Reddit
Website listings, like a socially curated Google search

  1. All of the Above

In practice, many DAOs will include decision-making in more than one category. An open-source software project, in addition to rewarding its contributors (case 1), might collectively curate what code will be included in each release, or featured in its newsletter (3). Conversely, a social network, in addition to curating content (3), has a business to run, and must pay its developers, marketers, legal personnel, and so on (1). And either organization might want to invest the proceeds from their activities into other projects (2).

@dylanschwartz followed up with: "What sort of decisions can we make as a majority that cannot be better made by a few highly intelligent, well educated, rational thinkers?"

Good questions – couple of answers.

  1. Leaving decision-making up to only a few people centralizes power and exposes the system to concentrated points of failure, bad influence, etc.

  2. Effective systems for decentralized governance do need to account for the disparities in expertise and qualification to make decisions. DAOstack includes reputation management systems to help determine how to weigh votes in decision-making. So, it might the case effectively that certain decisions are carried out by only a few individuals who have particularly high reputation (voting power) in a given organization. But even then, that voting power is fluid – able to be redistributed according to their performance as evaluated by the wisdom of the crowd. It’s not fixed power by virtue of title or position.